Promoting Political Freedoms in Burma:
International Policy Options

Brahma Chellaney[*]

(Prepared for presentation at the Burma workshop of the Swedish Institute of International Affairs, Stockholm, May 8-9, 2008.)

In a year that marks the 60^th anniversary of Burma’s independence, the country’s junta is holding a national referendum on a new Constitution, as part of a touted seven-step “roadmap to democracy.” With the military ensconced in power for 46 long years, few believe it will hand over power to civilians after promised elections in two years’ time. It took the military more than 14 years just to draft a new Constitution,[1] which grants wide-ranging powers and prerogatives to the military, including 25 percent of the seats in the federal and provincial legislatures.

U.S. President George W. Bush has not only denounced the Constitutional process as fatally flawed, but also on May 1, 2008, slapped yet more sanctions on Burma. The latest sanctions are targeted at state-owned companies that produce timber, pearls and precious gem — firms that are, in Bush’s words, “major sources of funds that prop up the junta.”[2] The United States earlier had imposed sanctions on companies controlled by private individuals in the airline and hotel businesses in an effort to smother foreign tourism flow to Burma.

Such is the tragedy that Burma symbolizes that, in one week, it has been battered both by new sanctions and a tropical cyclone from the Bay of Bengal that reportedly killed thousands of residents along the southeastern coast. On the one hand, impoverished Burma is economically vulnerable and thus seemingly susceptible to outside pressure. On the other hand, Burma has proven to be a complex and exceedingly difficult case on what the outside world can do.

What role external actors can play in promoting a democratic transition, however, is an issue not limited to Burma. Autocratic rule abounds in the world, including around Burma. International principles and policies deemed appropriate to help bring about democratic transition in Burma should ideally be such that they permit application in other settings, if promotion of democracy is not to be seen as a political tool to target bad autocracies while shielding those that are perceived in one’s self-interest to be good autocracies.

Yet the temptation to look at Burma in isolation, as if it uniquely exists in a tight compartment, has been so overpowering that the country has been held to special standards and subjected to unrelenting demands that are rarely invoked against stronger, more-entrenched autocracies that still flout near-universal human-rights norms. These other autocracies, unlike Burma, actually pose a challenge to the liberal international order. But such selective targeting may be one reason why international efforts to demilitarize Burma’s polity have been a signal failure. It is helpful to look at Burma in a larger regional and Asian context.

Today, a qualitative reordering of power in Asia is challenging strategic stability and reshaping major equations. A new Great Game is underway, centered on building new alliances, ensuring power equilibrium, gaining greater market access, and securing a larger share of energy and mineral resources. From war-games on the high seas to the establishment of exploratory enterprises like the Shanghai Cooperation Organization and the Quadrilateral Initiative, the ongoing developments are a reminder of that high-stakes game. With the center of gravity in international relations clearly moving toward the Asia-Pacific, this Great Game could indeed determine the future world order.

Asia has almost 60 percent of the world’s population spread across a 43.6 million-square-kilometer area. Geographically, Asia comprises 48 separate nations, including 72 percent of the Russian Federation and 97 percent of Turkey, although in popular perception it seems to comprise only the area from the Japanese archipelago to the Indian subcontinent. Asia encompasses very different and distinct areas — from the sub-arctic, mineral-rich Siberian plains to the subtropical Indonesian archipelago; and from oil-rich desert lands to fertile river valleys.

Asia is also very diverse. It has countries with the highest and lowest population densities in the world — Singapore and Mongolia, respectively. It has some of the wealthiest states in the world, like Japan and Singapore, and also some of the poorest, such as Burma, North Korea and Afghanistan. It has tiny Brunei, Bhutan and the Maldives and demographic titans like China, India and Indonesia. The smallest country in Asia in terms of population, the Maldives, also happens to be the flattest state in the world. In sharp contrast to the low-lying states like the Maldives, the Philippines and Bangladesh that are threatened by the potential rise of ocean levels due to global warming, Asia has mountainous nations like Nepal, Afghanistan and Kyrgyzstan.

Parts of continental Asia are extraordinarily resource-rich. The desert lands of West Asia, the barren wastes of Central Asia, the Russian shelf in Asia and the Burma’s Bay of Bengal coast together hold nearly 60 per cent of the world’s proven oil and gas reserves. Burma, rich in natural resources, sits on potentially vast quantities of natural gas. There are vast coal reserves in China and the Russian Far East. Siberia holds ores of almost all economically valuable metals, including some of the world’s largest deposits of nickel, gold, lead, molybdenum, diamonds, silver and zinc. The belt running down from the Malay Peninsula to Indonesia contains huge deposits of tin.

Asia, however, is largely a water-stressed continent. Large parts of Asia depend on monsoon precipitation and on the glacially sourced water reserves of the Himalayas and Tibetan highlands, the riverhead of Asia’s waters. Climate change will have a significant impact on the availability and flow of water resources in Asia and thus become an important factor in the national-security calculus of several states, including the world’s two most populous countries — China and India. The geopolitical importance of the Tibetan plateau, whose forcible absorption in 1950 brought the new Chinese state to the borders of India, can be seen from the fact that most of the great Asian rivers originate there. If the demand for water in Asia continues to grow at the current rate, the interstate and intrastate disputes over water resources could potentially turn into conflicts in the years ahead.

Another area of sharpening Asian geopolitics is energy. Competition over oil and gas resources, driven by rapid economic growth in Asia, indeed constitutes one key dimension of the emerging Great Game. The ongoing global shifts in economic power are manifest from the changes occurring in the energy and materials sectors, with the growth in demand moving from the developed to the developing world, principally Asia. Energy prices are going to stay high and volatile for the foreseeable future, given these shifts and the soaring demand in countries like China and India, which together are projected to double their oil demand between 2003 and 2020.

Despite the total consumption of energy in the Asia-Pacific having grown by 70 percent between 1992 and 2005, per capita energy consumption is still relatively low by international standards: 749 kg of oil equivalent in 2005, compared with the global average of 1,071 kgoe. Not only will per capita consumption grow sharply in Asia, “on the supply side, Asia’s strong demand environment for energy and basic materials, coupled with its low labor costs, means that the region will increasingly become a global producer of aluminum, chemicals, paper, and steel.”[3]

Slaking the tremendous thirst of the fast-growing Asian economies and meeting the huge demands of the old economic giants in the West are at the core of the great energy dilemma facing the world in the 21^st century. Finding an energy “fix” has become imperative if the Asian and other emerging economies are to continue to grow impressively and if the prosperous countries are to head off a slump. Such a “fix” would have to be rooted in three essential elements: low-cost, preferably, renewable alternatives to fossil fuels; greater energy efficiency; and minimizing or eliminating greenhouse-gas emissions. The ongoing structural shifts in global energy markets carry important long-term political and economic implications, besides challenging the stability of these markets.

Employing their large oil and gas resources, energy-rich countries have positioned themselves as key players in the Asian Great Game. Russia, for example, has used its oil and gas exports to revive its fortunes, succeeding in becoming an important geopolitical player again. But for its huge oil and gas wealth, Iran would not have been able to play its nuclear card in defiance of the United Nations Security Council resolutions. In a more modest way, Burma has been able to use gas deals with Thailand and China to earn hard cash in the face of tightening international sanctions. External players like the United States, the European Union and Turkey have sought to influence the pipeline politics in Asia. The United States has not only strengthened its military arrangements in West Asia, but also set up new bases or strategic relationships stretching from the oil-rich Caspian Sea basin to Southeast Asia. In this larger picture, southern Asia (of which Burma is a part) is a strategic gateway between the Gulf and the Far East, and between Central Asia and the Indian Ocean rim.

In the coming years, the voracious appetite for energy supplies in Asia is going to make the geopolitics murkier. The present geopolitical maneuvering is an indicator of that. What is striking is that the new flurry of alliance formation or partnerships in Asia is being led by Asia’s rising powers, not by the United States, which has policed Asia since the end of World War II. In this larger context, Asian cooperation and security will be very much influenced by the equations between and among the major players. The need to secure stable energy supplies will drive the major players in Asia to increasingly integrate their energy policy with foreign policy, as they consciously promote diplomatic strategies geared toward seizing energy-related opportunities overseas.

Energy-driven competition should not be allowed to aggravate interstate rivalries in Asia. Mercantilist efforts to assert control over oil and natural gas supplies and transport routes certainly risk fuelling tensions. Given the lack of regional institutions in Asia to avert or manage conflict, the sharpening energy geopolitics makes the need for Asian energy cooperation more pressing. A challenge for states in Asia is to manage their energy needs through more efficient transport and consumption and more cooperative import policies. Multinational cooperation on the security of sea-lanes is essential to avert strategic friction in Asia. Where maritime claims overlap, the answer to any such dispute cannot be unilateral drilling or production by one side. Disputes over what are legitimate zones of energy exploration in open seas need to be managed through an agreed code of conduct.

Multilateral energy cooperation in Asia indeed can pave the way for establishing a common Asian market and distribution network for petroleum products, with an Asian benchmark crude oil (similar to Europe’s Brent blend) to serve as a pricing yardstick for other types of crude. Multilateral cooperation can also help to both regulate the competition to buy foreign energy assets and to hedge risks in the event of any supply disruption, whether politically induced or accidental, like a major refinery fire. And just as Europe wants Russia to open its energy industry to European investment to create a two-way relationship, the major oil-and-gas exporters and the major Asian importers should invest in each other’s energy infrastructure.

It is against the larger Asian landscape that one should examine Burma because no country or sub-region can be tightly compartmentalized and seen in isolation. Energy-rich states almost everywhere tend to have non-democratic governments, many of them repressive autocracies. In that sense, Burma is not an exception.

Even though it has significant gas reserves that are coveted by its neighbors, a sanctions-hit Burma has not reaped the energy dividends that most other autocratically ruled energy-rich states have. Also, it is nobody’s case that Burma’s curtailment of basic rights is worse than Saudi Arabia’s.

While it is easy to criticize Thailand for boosting the Burmese junta’s revenues through gas imports and to condemn China for signing a 30-year gas deal with Burma, it should be remembered that no democracy has compunction in buying oil from Saudi Arabia, even though such purchases help fatten the House of Saud, which played a lead role in fanning the spread of Islamist ideology in the world. It bankrolled jihad as part of its aggressive export of the medieval theology of Wahhabism, named after the revivalist movement founded by Muhammad Ibn’Abd al-Wahhab in 1744.

Burma’s resources and vantage location

Burma is a significant state in size and strategic importance. Bordered by Bangladesh, China, India, Laos and Thailand and by the Andaman Sea and the Bay of Bengal, Burma comprises an area of 678,000 square kilometers, making it the country with the largest landmass in the Indochina belt. It currently has a population of nearly 58 million, with a large and capable workforce.

Few can overlook Burma’s strategic location. It forms the strategic nucleus between India, China and Southeast Asia. In other words, Burma is where Asia’s main regions converge — South Asia, Southeast Asia and East Asia.

Projects to establish an ‘Asian Highway Network’ and a ‘Trans-Asian Railway’ have only underlined Burma’s strategic-bridge role. It is a country that geographically bridges Asia’s major economies. In the Asian highway project, Burma will help connect five important countries – India, China, Bangladesh, Laos, and Thailand. The Asian Development Bank has been negotiating a cross-border transport agreement among the six Mekong River-linked countries – China, Thailand, Laos, Cambodia, Vietnam and Burma.

Burma’s bounteous natural resources include natural gas, precious metals and gems, high-quality tropical hardwoods, and marine fisheries. Given that profile and position, Burma can hardly be ignored.

With major rivers and bountiful rainfall, Burma has fertile soil. But for recurrent flooding and cyclones, shortages of fertilizers and pesticides, and general mismanagement by the military-run government, its agricultural output could be much higher. Agriculture, including fisheries, forestry, livestock, rice and sugarcane, made up almost 57 percent of its GDP in 2005.[4] In the past decade, Burma has emerged as a major exporter to India, for instance, of lentils, which — rich in protein — are an integral part of the diet of vegetarians. India has the world’s highest concentration of vegetarians. Last year, Burma supplied around one million tons of lentils, or half of India’s total imports, according to official data.

Burma is a significant producer of antimonial lead, copper matte, nickel speiss, and precious gemstones. Much of the copper exports go to Japan. It also produces barite, carbonate rocks, chromite, clays, coal (lignite), copper, feldspar, gold, gypsum, lead, natural gas, nickel, silver, tin, tungsten and zinc. Among processed mineral products, Burma produces polished precious gemstones, refined gold, refined lead, petroleum products and crude steel. Minerals, however, constitute a tiny fraction of its GDP.

With its exports totaling $3.1 billion and imports adding up to $3.5 billion in 2005, Burma’s main trading partners are its neighbors — Thailand, China, India, Singapore and Malaysia. In merchandise trade, Thailand ranks No. 1. But if the opaque arms trade (for which no reliable figures are available) and services are included, China is perhaps Burma’s largest trading partner.

Through sanctions and officially encouraged disengagement, Burma has become marginal to the foreign-policy interests of the West, thus reinforcing the Western approach emphasizing high-minded principles over strategic considerations, and isolation over engagement. Today, the West has little financial stake left in Burma. About 95 percent of Burma’s trade in fiscal 2007-08 was with other Asian countries. The West also doesn’t have to live with the consequences of its actions. Burma’s neighbors, however, will not escape the effects of an unstable Burma. The imperatives of proximity thus dictate a different policy logic. That has spurred criticism that Asia is helping Burma beat sanctions. [5]

Rich in natural gas, Burma — according to one estimate by Alexander’s Gas & Oil Connections (a site for the gas, oil and affiliated industry) — has recoverable onshore and offshore reserves of 2.46 trillion cubic meters. But with greater foreign investment in exploration, more rich gas deposits could be discovered, especially in Burma’s offshore areas in the Bay of Bengal.

In January 2008, the state-owned China National Petroleum Corp (CNPC) signed production-sharing contracts with the Burmese Ministry of Energy covering deep-sea blocks off Burma’s western Rakhine coast. CNPC is about to begin construction of a trans-Burma pipeline to take the gas from the Shwe field in Rakhine to China’s Yunnan province and beyond. Burma is already exporting natural gas worth $1.2 billion a year to neighboring Thailand from the Gulf of Martaban.

Daewoo International, the South Korean company, is the largest investor in the Shwe gas site. Two Indian energy firms, ONGC Videsh Ltd. and Gas Authority of India Ltd. (GAIL), own a minority stake in that Burmese field, A-1, and in the adjacent A-3 block. This Indo-Korean consortium of Daewoo, ONGC Videsh and GAIL had earlier discovered additional gas deposits in the Shwe site, and consequently revised the Block A1’s total gas estimates to 566 billion cubic meters.

Burma, however, took India unawares by signing an accord with CNPC to export gas to China from the A-1 and A-3 fields over a 30-year period. To New Delhi’s acute embarrassment, Burma first disclosed its intent to sell the gas to China no sooner than India had announced an agreement-in-principle with Beijing to jointly cooperate on securing energy resources overseas, so as to prevent the Sino-Indian competition from continuing to drive up the international price of such assets in third countries.

In recent years, Burma has stepped up piped gas exports to Thailand from its two offshore fields in the Gulf of Martaban — Yadana and Yetagun. But the new rich gas finds in the Bay of Bengal will help generate far more revenue for Burma than the current gas flow from the Gulf of Martaban. According to provisional data, gas exports to Thailand from the Gulf of Martaban fields were estimated to be worth $1.2 billion in fiscal 2007-08 that ended March 31. But because the official exchange rate pegs the kyat, Burma’s currency, to an artificially low rate of 6 to 1 against the U.S. dollar (when the black-market rate is in the vicinity of nearly 1,000 kyat to a dollar), the gas-export earnings are much underreported in the public accounts in kyat — nearly 200 times below the unofficial exchange rate.[6]

France’s Total S.A. (with a 31.24 percent holding) is the main operator at the Yadana gasfield, and its other partners are Chevron Corp. of USA (with a 28.26 percent stake), Thailand’s PTT Exploration and Production Public Company Limited (25.5 percent), and the state-run Myanmar Oil and Gas Enterprise (MOGE) (15 percent).

In the Yetagun gasfield, the main operator is Malaysia’s Petronas (40.91 percent), with MOGE (20.45 percent) and Thailand’s PTTEP and Japan’s Nippon Oil Exploration (19.32 percent each) as its partners. Gas imports from Burma are critical to Thailand’s power generation, with one-fifth of Bangkok’s electricity supply coming from that source.

Interestingly, the United States, while prohibiting new investment by American citizens or entities, has protected the business interests of Chevron Corp., which acquired a stake in the Yadana gas project in Burma when it bought Unocal Corp. in 2005. Because Unocal’s investment in the project predated the imposition of U.S. sanctions, Chevron has used a grandfather clause to stay put in Burma — one of the few large Western companies left there.

On the gas front, Burma has shown that interstate pipeline politics can be played not only by strong states but also by weak states. The junta in Burma has deftly played pipeline politics to keep the veto-empowered China on its side at the United Nations Security Council. Since the early 1990s, the junta has relied on China’s veto power to shield itself from international intervention. It was China that helped beat back an early 2007 U.S.-led attempt to impose a Security Council diktat on the junta to improve its human-rights record.[7]

The junta then proceeded to thank Beijing for torpedoing that sanctions move by withdrawing the status of India’s GAIL as the “preferential buyer” on the A-1 and A-3 blocks, and signing production-sharing contracts with China’s CNPC instead. For India, this was a discomforting diplomatic setback for two reasons: (i) it had sought to sweeten the deal both with a US$20 million “soft credit” and by proposing to construct a power plant in Burma; and (ii) the A-1 and A-3 are partly owned by two Indian state-run companies.[8]

Burma also has some onshore and offshore oilfields, with reserves estimated to be 3.2 billion barrels of recoverable crude oil. It produced 8.133 million barrels of crude oil in 2005, compared with 7.160 million barrels in 2004.[9] At least three oil companies from neighboring countries, including India’s privately owned Essar, are presently exploring for additional oil finds in Burma by conducting feasibility studies involving collection and analysis of geologic and seismic data.

Foreign investment in Burma’s energy sector, however, has not been too significant compared to the sector’s actual potential. Had Burma not been an isolated, sanctions-hit country, the picture would have been different, with international oil majors seeking exploration and production rights there. Sanctions have actually prevented Burma (like Iran) from accessing liquefaction technology to become a major exporter of liquefied natural gas (LNG). That has left Burma largely with one choice: to export natural gas by pipeline. And to whom can it sell natural gas by pipeline? Naturally, to its immediate neighbors, as it is currently doing to Thailand and is going to do to China once the new pipeline is complete. India till date has failed to secure a single production-sharing contract to buy Burmese gas.

Burma’s vantage location has also added its energy-related importance in a different way — at least for China. In addition to importing Burmese gas, China is setting up an energy corridor through Burma involving an oil pipeline to transship crude oil it imports from the Middle East and Africa. In other words, Burma is both a source of energy as well as a transshipment route for China. China presently is finalizing technical details for the construction of the oil pipeline, which — running the length of Burma — will go at least up to Chongqing, a new province carved out of Sichuan, according to one report.[10]

This energy pipeline is part of a strategic corridor — the Irrawaddy Corridor — that China is setting up to link its southwestern provinces with the Bay of Bengal and the Indian Ocean through Burma. The corridor establishes road, river, rail and energy links from China’s Yunnan and Chongqing provinces to Burma’s Chinese-built harbors at Kyaukypu and Thilawa. Along with Beijing’s onshore and offshore strategic assets in Burma, this corridor signifies an enlarging Chinese footprint in that country.

The energy pipeline and strategic corridor through Burma need to be seen in the context of the other Chinese moves and actions in southern Asia that have far-reaching strategic implications for India, Japan, the United States, Australia and other players in the Indian Ocean rim region. Besides the intent to transfer Gulf and African oil for its consumption by cutting the transportation distance and minimizing its exposure to U.S.-policed sea-lanes, China has important strategic objectives in mind in fashioning new transportation routes.[11] A fourfold Chinese strategy is currently being implemented:

1. The north-south strategic trail that the Irrawaddy Corridor represents, granting China access to the Bay of Bengal and the Indian Ocean.

2. A second strategic corridor in a north-south axis being fashioned in southern Asia is the trans-Karakoram corridor stretching from western China down to Pakistan’s new, Chinese-built Gwadar port, at the entrance to the Strait of Hormuz, through which 40 percent of the world’s oil supply passes. Opened in the spring of 2007, the deepwater port at Gwadar represents China’s first strategic foothold in the Arabian Sea. China’s plan is to make Gwadar a major hub transporting Gulf and African oil by pipeline to the Chinese heartland via Xinjiang. Such piped oil would not only cut freight costs and supply time but also lower China’s reliance on shipping lanes through the Malacca and Taiwan Straits. Pakistan has already signed a memorandum of understanding with Beijing for “studies to build the energy corridor to China.”

3. China is shoring up an east-west strategic corridor in Tibet across India’s northern frontiers, as illustrated by the $6.2 billion China-Tibet railway from Gormu to Lhasa that opened in July 2006. Beijing is now extending the Tibetan railway to the Nepalese capital of Katmandu and also to two other points: the tri-junction of the India-Bhutan-Tibet frontiers (in the Chumbi Valley) and the intersection of the India-Burma-Tibet borders.

4. China’s incremental efforts to build a “string of pearls” along the Indian Ocean rim symbolize Beijing’s desire for a fourth strategic corridor. It seeks to assemble this “string of pearls” — a term first used in a report for the Pentagon by U.S. defense contractor Booz Allen Hamilton — through forward listening posts, naval-access agreements and Chinese-built harbors stretching from Pakistan and Sri Lanka to Bangladesh and Burma. The Chinese interest in the Indian Ocean rim now extends to the Seychelles.

For China, Burma is a critical entryway to the Bay of Bengal and the Indian Ocean. Chinese strategic positioning in Burma also needs to be seen against the backdrop of Burma overlooking vital sea lanes of communication through the Strait of Malacca. Not unsurprisingly, the Irrawaddy Corridor has brought Chinese security personnel to Burmese sites close both to India’s eastern strategic assets and to the Strait of Malacca. With the Irrawaddy Corridor stretching to the Bay of Bengal, Chinese security agencies have positioned personnel at several Burmese coastal points, including the Chinese-built harbors.

These security agencies already operate electronic-intelligence and maritime-reconnaissance facilities on the two Coco Islands in the Bay of Bengal. India transferred the Coco Islands to Burma in the 1950s, and Burma then leased the islands to China in 1994. Today, despite denials by the Burmese junta, there is documented evidence, including satellite imagery, showing that China operates a signals intelligence (SIGINT) collection facility from the Great Coco Island.

The Irrawaddy Corridor holds important strategic implications for several players in the Indian Ocean rim region. Such transportation and strategic links, for example, give China leeway to strategically meddle in India’s restive northeast, including the state of Arunachal Pradesh, which China claims to be Chinese territory. Operating in India’s northeast through the plains of Burma (which was part of the British Indian empire) is much easier than having to operate across the mighty Himalayas.[12] It is no wonder that during World War II, both the Allied and the Axis powers classified Burma as the “back door to India.” The potential for Chinese strategic interference has to be viewed against the background that the tribal insurgencies in India’s northeast were all instigated by Maoist China, which trained and armed these rebels partly by exploiting the Burma route. Today, India has an 850-kilometer-long porous border with Burma, with insurgents operating on both sides with the help of shared ethnicity.[13] (Continued below)

Promoting Political Freedoms in Burma:
International Policy Options

Understanding international options

Promotion of democracy in Burma is a justifiable goal because that ethnically fractious country cannot indefinitely be held together by brute force. The empowerment of its masses is imperative to create a grassroots stake in Burma’s unity and territorial integrity. Genuine participatory processes are also necessary to promote ethnic reconciliation in a country internally scarred from long years of sectarian strife.

Yet, even among those who share this goal, one sees an interesting, even if nuanced, split: Europeans and Americans tend to emphasize the primacy of principles over strategic considerations, while Asians seem to favor engagement and a softer approach. To be sure, there is no common Asian approach. Differences over Burma are subtle yet eye-catching among the Asian players, with some states (like India and Japan) gently pushing the junta toward political reconciliation and democratic opening, and some others (such as China) viewing democracy advocacy by the West as national-interest promotion by other means. Still, the imperatives of proximity impel states in the neighborhood not to rely on an approach centered on penal action against and the isolation of Burma. Similarly, the U.S. and the European Union have far from a common approach. The U.S., under President George W. Bush, has moved to a sanctions-only approach toward Burma, while the EU, despite widening its own sanctions since last year, is keen to keep open channels of dialogue and humanitarian assistance.

Distance from Burma has been a crucial factor in determining major players’ approach toward that country. The greater a state’s geographical distance from Burma, the more ready for action it has been on Burma. And the shorter a state’s distance from Burma, the greater the caution and tact in its policy.

Burma’s present problems (and impoverishment) can be traced back to the politically cataclysmic events of 1962, when the military under General Ne Win ousted an elected government and thereafter sought to introduce autarky by cutting off the country from the rest of the world. If Burma has gone from being Asia’s rice bowl to becoming a virtual pauper state, the blame has to fall on the 1962 coup and what it introduced. Ne Win, a devotee of Marx and Stalin, banned most external trade and investment, nationalized companies, halted all foreign projects and tourism, and kicked out expatriates engaged in business. Yet the West, not unhappy that the military had ousted a founding leader of the non-alignment movement, Prime Minister U Nu, imposed no sanctions on Burma. Over the subsequent years, Ne Win fashioned a virtual one-man dictatorship under his authority.

More than a quarter-century later, even the bloodbath of 1998 that left several thousand student-led demonstrators dead or injured did not invite Western sanctions. That bloodbath coincided with the numerology-dedicated Ne Win’s public announcement of retirement on the ‘most auspicious’ day of August 8, 1988 (8.8.88). Time will tell whether China, also addicted to the power of number 8, is courting trouble 20 years later by launching the Beijing Olympics on 8.8.08 at 8.08 am. In Burma, for the democratic opposition, 8.8.88 symbolized the launch of the democracy movement. Its 20^th anniversary thus will be commemorated on the same day the Beijing Olympics kick off with an opening ceremony that some world leaders are threatening to boycott over the brutal repression in Tibet.

In fact, the events of 1988 triggered a stronger response from India and Japan than from the West. India, with missionary zeal, began cutting off all contact with the junta in the post-1988 period and started giving sanctuary to Burmese dissidents. Such righteous activism, heightened by the junta’s subsequent July 1989 detention of Burmese opposition leader Aung San Suu Kyi, who has had close ties with India since her student days,[14] however, cost India dear. By the mid-1990s, China had strategically penetrated Burma, opening a new flank against India. The sobering lessons from a decade of foreign-policy activism on Burma post-1988 has helped instill greater geopolitical activism in India’s approach in recent years.

Japan, for its part, suspended its Overseas Development Assistance to Burma, following the 1988 developments. And when in 1992 Japan adopted an ODA charter espousing human rights and democracy, that provision was first invoked against Burma to slash ODA. Since then, Japanese ODA has been limited largely to humanitarian and technical assistance. While Japanese ODA to Burma had averaged $154.8 million a year during the period 1978-88, it has fallen to an average of $36.7 million a year between 1996 and 2005, according to official Japanese figures. With China eclipsing Japan as the largest aid provider, Tokyo has seen its traditional influence in Burma wane.

The military has been in power in Burma for 46 long years.[15] But the Western penal approach toward Burma began shaping up only in the 1990s. In fact, it was not until this decade that Burma became a major target of U.S. sanctions, reflected in the congressional passage of the 2003 Burma Freedom and Democracy Act and the enforcement of several subsequent punitive executive orders dating up to May 1, 2008.[16] 

Some U.S. measures put in place against the junta before 2003 included a ban on new investment and an American veto on any proposed loan or assistance by international financial institutions. That ban on new U.S. investments was imposed as far back as 1997 — the same year the Association of South-East Asian Nations (ASEAN) admitted Burma as a member. The Clinton administration could take that decision in 1997 because at that time the United States had minimal trade with Burma and a total investment of only $225 million.[17] Apart from Burma’s opium produce having a bearing on U.S. counternarcotics policy, that country was not a serious foreign-policy concern in Washington.

Indeed, until the advent of the Bush administration, Burma was not among the key targets of sanctions, with the broadest U.S. sanctions being directed at countries identified as supporting terrorism: Cuba, Iran, Libya, North Korea, Syria and Sudan. In a September 1998 report to the U.S. House of Representatives, for example, the U.S. International Trade Commission (USITC) had identified 142 provisions in 42 federal laws applying unilateral economic sanctions against some countries. Some of the provisions were directed against Burma, but that country wasn’t among the key U.S. targets.[18]

Even though there was considerable evidence through the 1990s that the unilateral sanctions approach introduced by the Clinton administration wasn’t helping to loosen the military’s grip on Burma,[19] the U.S. considerably broadened its penal actions in this decade under Bush. The bilateral and multilateral measures mandated by the 2003 Burma Freedom and Democracy Act[20] have led to the U.S. imposition of a ban on all imports from that country, combined with an array of other sanctions. But as the State Department has admitted, the U.S. “import ban implemented in 2003 would be far more effective if countries importing Burma’s high-value exports (such as natural gas and timber) … would join us in our actions.”[21]

While a number of nations have slapped sanctions on Burma, especially after the brutal way the September 2007 monk-led protests were suppressed, the blunt fact is that no nation thus far has emulated the extent to which United States has gone in imposing penal actions. In fact, the history of U.S. sanctions against Burma since 1997 has followed a now-familiar pattern in U.S. policy — first imposing an array of unilateral sanctions against a pariah regime, then discovering that the sanctions aren’t working and, therefore, turning to allies and partners to join in the penal campaign, and finally threatening sanctions against firms from third countries if those nations refuse to toe the U.S. line.

As far as the Burma-related international sanctions are concerned, their history underscores the manner the penal approach got shaped not by a cause — bringing an end to the military rule — but by the political travails of an iconic personality, Aung San Suu Kyi, the daughter of Burma’s founding father, Aung San, the Japanese-trained commander of the Burmese Independence Army. Suu Kyi, having been accidentally thrown into the vortex of national politics in autumn 1988,[22] has helped inspire and mold the Western punitive approach toward Burma.

The junta’s detention of her from July 1989 onward and its refusal to honor the people’s verdict in the May 1990 national elections brought Suu Kyi to the center of world attention, with she receiving several international awards in quick succession — the Rafto Human Rights Prize in October 1990; the European Parliament’s Sakharov Human Rights Prize in July 1991; and the Nobel Peace Prize in October 1991. A major trigger in galvanizing international opinion was clearly the junta’s brazen refusal to cede power despite the May 1990 national elections, which gave the detained Suu Kyi’s National League for Democracy (NLD) party 59 percent of the votes but 82 percent of the seats in Parliament. By keeping her in detention for nearly 13 of the past 19 years, the junta has itself contributed to building Suu Kyi as an international symbol of the Burmese struggle for political freedoms.

The personality-shaped nature of the sanctions approach can also be explained by the fact that before Suu Kyi, there was no unifying figure to challenge the military’s domination in all spheres of the state and to lead a national movement for the restoration of democracy. The Nobel prize greatly increased her international profile and domestic clout. Western aid cutoffs and other penal actions thus began only in the period after the junta refused to honor the results of the 1990 elections.

How a personality can help shape the sanctions approach was further underlined by the way Suu Kyi’s personal rapport with U.S. Secretary of State Madeleine Albright helped spur President Bill Clinton to reluctantly impose a ban in 1997 on new American investments to develop Burma’s resources. That ban was slapped even though international pressure, and the Clinton administration’s own intervention, had made the junta to release Suu Kyi in July 1995 after six years in house detention.

Not only has the sanctions approach been personality-driven, but also a personality hue has been put even on the internal struggle in Burma. That struggle has been portrayed, simplistically, as a battle between Aung San Suu Kyi and the junta’s reclusive chairman, General Than Shwe, a fight between good and evil, and a tussle between the forces of freedom and the forces of ruthlessness. While such a portrayal is useful to draw international attention to a remote country that is peripheral to the interests of all except its neighbors, it helps obscure the complex and multifaceted realities on the ground.

Despite Suu Kyi’s central role in shining a constant international spotlight for 19 years on the military’s repressive and illegitimate rule, the grim reality is that years of tightening sanctions against Burma haven’t helped loosen the military’s vise on polity and society. If anything, the sanctions have only worsened the plight of ordinary Burmese. Far from the people gaining political freedoms, an again-detained Suu Kyi’s personal freedom has remained an outstanding issue. While the ordinary Burmese have been the main losers, the international approach has proven a strategic boon for China, creating much-desired space for it to expand its interests in and leverage over Burma. That has happened largely at the expense of the interests of democratic states, which, in any event, have continued to pursue varying, and at times conflicting, policies on Burma. Against this background, what should be a realistic, yet productive, approach toward Burma?

Burma now ranks as one of the world’s most isolated and sanctioned nations — a situation unlikely to be changed by the Constitutional process and other steps in the junta-touted “roadmap to democracy,” unless the international community under the U.S. leadership adopts a fresh approach toward that country.

There has been a proliferation in recent years of indexes developed by research institutions that seek to rank countries in terms of their comparative vulnerabilities and weaknesses, including state failure, repression, corruption and disparities. What is striking about Burma is that it ranks in all the indexes as among the most corrupt and dysfunctional states. And yet its state machinery seems strong enough to wage unrelenting political repression and persecution of ethnic minorities.

The annual Failed States Index (FSI) prepared by the independent, Washington-based group, The Fund for Peace, for example, employs 12 social, economic, political and military indicators to rank 177 states in order of their vulnerability to violent internal conflict and societal deterioration. It is based on the capacities of core state institutions to mitigate adverse trends promoting state instability. The 2007 index ranks Burma among the top 20 unstable states prone to violent conflict and societal dysfunction.[23] Sudan tops the rankings as the state most at risk of failure. But four states in southern Asia figure in the top 20 dysfunctional states: Afghanistan at No. 8, Pakistan (No. 12), Burma (No. 14) and Bangladesh (No. 16). That shows that symptoms of state failure are acute in this part of the world.

Similarly, the Brookings Institution’s new Index of State Weakness in the Developing World ranks Burma as the 17^th weakest state among the 141 countries it assessed, with Somalia, at the No. 1 position, symbolizing an utterly failed state and the Slovak Republic (at the top of the ladder, No. 141) representing a successful democracy.[24] Burma was identified as one of five critically weak states outside sub-Saharan Africa.

In the World Press Freedom Index, [25] Burma ranks No. 163 in the 167-nation list. Without freedom of expression, no process of democratization can begin. Burma’s leaders are not just autocrats; like other repressive rulers in Asia, they believe in the indispensability and virtues of autocracy.

They have used the threat of Balkanization to justify their stranglehold on politics. The military sees itself as the only institution that can keep Burma united. Preventing the splintering of the country, however, has come at a heavy price. It was the military’s autarkic policies and gross economic mismanagement post-1962 that spurred widespread poverty and the flight of capital from the country.

According to Transparency International, Burma and Somalia are on par as the most corrupt countries in the world.[26] The Berlin-based Transparency International, as part of its annual survey of corruption (which it defines as the abuse of public office for private gain), publishes an index of countries ranked from the least corrupt to the most corrupt, on a scale of 10 to 0, with 10 representing no corruption and 0 signifying total sleaze and bribery. Its 2007 Corruption Perceptions Index brings out the growing problem of corruption in Asia. Among the most corrupt states in the index was Burma’s neighbor, Bangladesh. That the poorest states of Asia like Bangladesh and Burma are also the most corrupt only shows that corruption is both a cause of poverty as well as a hindrance to the amelioration of the conditions of the impoverished people.

The key point arising from the various indexes is that Burma is a pretty dysfunctional state with corroding institutions and an oversized military that dominates all spheres of national activity. Since the September 11, 2001, terrorist attacks in the United States, it has been increasingly recognized that the threats to international peace and security now emanate more and more from the world’s weakest states. Tellingly, two of the world’s critically weak states, North Korea and Pakistan, are members of the nuclear club. It has become routine for the major players and the United Nations to reiterate their commitment to pull critically weak nations back from the precipice of state failure.

It is that argument — to stabilize a failing state — that the Bush administration has applied to pour some $11 billion as aid since 9/11 into terror-exporting Pakistan, ranked No. 33 in the Brookings’ Index of State Weakness in the Developing World. Reinforcing that argument, it is now considering throwing its weight behind Senator Joseph Biden’s call for a $2.5 billion package of additional nonmilitary aid to improve the lives of citizens in a country where the military has dominated all walks of life almost since Pakistan’s creation in 1947.

Can a different logic or argument be applied to Burma, one of the world’s weakest and most dysfunctional states that potentially poses a serious transnational security threat unless steps are taken to help stabilize its economy? Or should the stabilization of a failing state only begin when that country actually starts posing — like Pakistan — a threat to international security?

It is obvious that the international responses to separate cases of failing states need not be cut from the same cloth because every nation’s situation tends to be different from the others. Still, the undeniable fact is that Burma represents a case of grave state corrosion, with international sanctions having had the effect, however unintended, to lower the living standards of ordinary Burmese.

Another question relates to the extent to which sanctions should be employed? Should punitive actions preclude engagement? Without the Bush administration engaging Pyongyang, to give just one example, would it have been possible to achieve the progress, however tentative it might seem at this stage, on the North Korean nuclear program? It is nobody’s case that Burma is worse than North Korea.

Sanctions by themselves do not usually promote political freedoms and indeed, by ignoring humanitarian concerns, may help a regime to instill a sense of victimhood and shore up domestic support. Nor can just engagement be the answer. The notion that democracy is sure to follow if a country is integrated with the global economy has been disproved by China. The more economic and military power China has accumulated, the more sophisticated it has become in repressing at home, including through electronic surveillance and intimidation.

If freedom is to bloom in more countries, it is imperative to fashion a more principled, coherent, forward-looking international approach that objectively calibrates sanctions and engagement, and allows outside actors to actively influence developments within.

So what are the international options?

Despite its predatory military elite continuing to monopolize power, Burma does exhibit severe state weaknesses. Those vulnerabilities make continued international sanctions against it attractive, in order that its military is compelled to return to the barracks. Yet, years of sanctions have helped underscore the limits of securing significant results through punitive pressures alone.

Options still available to the international community will become clearer if we clinically assess our successes and failures vis-à-vis Burma thus far.

· Have economic disengagement from Burma and other punitive actions helped improve human rights in Burma?

· Has outside role helped, directly or indirectly, to improve the living conditions of the ordinary Burmese or to loosen the military’s political grip?

· By targeting vital sectors of the Burmese economy, to what extent have international sanctions helping choke the flow of funds to the military?

· What objective is served when disengagement blocks the flow of liberal ideas as well as investment and technology to improve working conditions?

· As shown in China, doesn’t foreign investment help build private institutions, boost employment and wages, aid civil-society development and exert a pro-reforms influence on a regime?

· Has the sanctions approach helped increase or decrease external influence over the Burmese regime?

· Given the waves of sanctions in recent years, what additional room is left to step up pressure on a recalcitrant junta? Have most cards already been played out?

· Does the current approach centered on the primacy of sanctions provide the junta a convenient scapegoat for its own gross mismanagement of the economy?

· By isolating Burma and forcing its regime to turn increasingly for succor to more-entrenched autocracies, are we promoting a regional power balance or imbalance?

· To what extent will a weaker, more dysfunctional Burma pose transnational security threats or cause difficulties in international counternarcotics and counterterrorist efforts?

In addition to our options being shaped by our answers to the aforesaid questions, there is also one larger issue that needs to be factored in. International options on Burma not only need to be realistic, but also be based on principles and positions valid for promotion of a transition to democracy in other autocratic settings.

What role outsiders can play to help democracy take roots remains a difficult issue internationally. Yet that issue looms large in relation to Asia. Unlike Europe where democracy has become the norm, only 16 of Asia’s 39 countries surveyed by Freedom House are really free.[27]

As shown by the World Press Freedom Index by the Paris-based international rights group, Reporters Without Borders, a number of Asian countries are among the worst suppressors of freedom. In the 167-nation list, North Korea ranked at the very bottom, Burma 163^rd, China 159^th, Vietnam 158^th, Laos and Uzbekistan 155^th, Bangladesh 151^st, Pakistan 150^th, Singapore 140^th and the Philippines 139^th.[28]

Bringing in comparative assessments will also help sculpt down-to-earth international options. Let’s look at one revealing comparative picture. Until the September 2007 protests in Rangoon and other Burmese cities and the March 2008 Tibetan uprising, Burma and China had been free of any major pro-freedom protests for about two decades. The previous major pro-freedom demonstrations occurred in Burma in 1988, and in China in 1989.

In 2007, in a two-month period, fuel price increases were announced first in Burma and then in China. The junta’s announcement on August 15, 2007, to double the price of gasoline, diesel fuel and compressed gas hit the ordinary Burmese hard by forcing up the price of public transport and triggering a knock-on effect on staples such as rice and cooking oil. That triggered protests, which became bigger by the day, with monks gradually joining in from early September and the demonstrations acquiring increasingly a political color as an expression of the grassroots anger against military rule. So, it was the rise in energy prices that paradoxically triggered the biggest protests since the 1988 uprising in an energy-rich country.[29] By contrast, the fuel price increases in China — announced just eight weeks after Burma — sparked only a few sporadic incidents of violence, with one person killed in Hainan Island, but spurring no pro-freedom protests.

Why fuel price increases triggered mass protests in one state but not in the other owes a lot to the fact that China had transformed itself radically in the past two decades since the Tiananmen Square massacre, while Burma remains isolated, impoverished and battered by sanctions. The post-Tiananmen international trade sanctions against China did not last long on the argument that they were hurting ordinary Chinese and that engagement was a better way to bring about political change. That was the correct approach. Had an approach pivoted on widening punitive actions been pursued, would China have emerged to the same degree as a dynamic economy that today serves as a growth locomotive for the world? Through its economic transformation, China has made its political modernization inescapable, although no one can predict when and in what form that would happen.

The same principle, however, was never applied to impoverished Burma, creating an unhealthy impression that promotion of freedom has become a diplomatic instrument to target not the world’s biggest autocracies but weak, unpopular, isolated states.[30] Sanctions against a jihad-bankrolling Saudi Arabia or a Tibet-repressing China would bring economic pain in the form of higher oil prices or job losses. So “it is the small or economically vulnerable kids on the global bloc, like Burma and Cuba … that will continue to be the targets of sanctions,” even if “innocent civilians living in those countries” suffer.[31]

While the military has ruled Burma for 46 years, the Chinese Communist Party has monopolized power for 59 years. Neither model is sustainable. The longest any autocratic system has survived in modern history was 74 years in the Soviet Union. At issue, though, is the role the free world can play in promoting a democratic transition in such states.

This issue has again been highlighted in comparative terms by the contrasting international responses to the monk-led freedom protests in Tibet and Burma. In fact, there are striking similarities between Tibet and Burma — both are strategically located, endowed with rich natural resources, suffering under long-standing repressive rule, resisting hard power with soft power, and facing an influx of Han settlers. Yet the international responses to the brutal crackdowns on monk-led protests in Tibet and Burma have been a study in contrast.

When the Burmese crackdown on peaceful protestors in Rangoon last September left at least 31 people dead — according to a UN special rapporteur’s report[32] — it ignited international indignation and a fresh wave of U.S.-led sanctions. More than seven months later, the tepid global response to China’s ongoing harsh crackdown in Tibet has raised the question whether that country has accumulated such international power as to escape even censure over actions that are more repressive and wide-ranging than what Burma witnessed.[33] Despite growing international appeals to Beijing to respect Tibetans’ human rights and cultural identity and begin true dialogue with the Dalai Lama, there has been no call for any penal action, however mild, against China.

When the Burmese generals cracked down on monks and their pro-democracy supporters, the outside world watched vivid images of brutality, thanks to citizen reporters using the Internet. The photograph of a Japanese videographer fatally shot on a Rangoon street was flashed across the world; it is a picture that defined the events of that month when police used baton charges and tear gas on monks and fellow protesters and then opened fire. On the worst day of violence — September 27, 2007 — authorities admitted nine deaths while unofficial figures were higher.

In contrast, China employs tens of thousands of cyberpolice to censor Web sites, patrol cybercafes, monitor text and video messages from cellular phones, and hunt down Internet activists. As a result, the outside world has yet to see a single haunting image of the Chinese use of brute force against Tibetans. The only images released by Beijing are those that seek to show Tibetans in bad light, as engaged in arson and other attacks.

The powerful Internet poses a bigger threat to repressive governments than pro-democracy demonstrations on the streets, if such protests are allowed at all. Seeking to fight fire with fire, some authoritarian regimes have clamped down on the Internet, closing blogger sites and employing sophisticated filtering software to block Web sites that carry references to ‘subversive’ words. Such regimes have proven that a country can blend control, coercion and patronage to stymie the politically liberalizing elements of market forces, especially when the state still has a hold over large parts of the economy.

The important parallels between Burma and Tibet begin with the fact that Burma’s majority citizens — the ethnic Burmans — are of Tibetan stock. But the Han demographic invasion of the Tibetan plateau is spilling over into Burma, with the Chinese presence conspicuous in Mandalay city and the areas to the northeast. Because of the growing Chinese commercial interests in Burma, the September 2007 street protests indeed had an underlying anti-Chinese tenor.

It is significant that the resistance against repressive rule in both Tibet and Burma is led by iconic Nobel laureates, one living in exile in India and the other under house detention for long in Rangoon. The Dalai Lama and Aung San Suu Kyi received the Nobel peace prize in quick succession for the same reason: for leading a non-violent struggle, in the tradition of Mahatma Gandhi. Each, a symbol of soft power, has built such moral authority as to command wide international respect and influence.

It has been announced that President Bush would soon sign legislation conferring Congress’s highest civilian honor to Suu Kyi, just months after he had personally presented the same prize — the Congressional Gold Medal — to the Dalai Lama. Suu Kyi, in fact, married a scholar in Tibetan and Himalayan studies, Michael Aris. With Aris, a Briton, Suu Kyi edited a book on Tibetan studies in honor of Hugh Richardson, an expert on Tibetan Buddhism.[34]

Yet another parallel is that heavy repression has failed to break the resistance to autocratic rule in both Tibet and Burma. If anything, growing authoritarianism has begun to backfire, as the popular revolts in Tibet and Burma have highlighted. More than half a century after Tibet’s annexation, the Tibetan struggle stands out as one of the longest and most-powerful resistance movements in modern world history. The latest Tibetan revolt, significantly, coincided with the Chinese legislature re-electing as president Hu Jintao, who as Tibet’s martial-law administrator suppressed the last major Tibetan uprising in 1989.

Similarly, despite detaining Suu Kyi for nearly 13 of the past 19 years, the Burmese junta has failed to muzzle the grassroots democracy movement, as last September’s bloody events showed. Democracy offers the only path to bringing enduring stability to ethnically troubled Burma. Indeed, ethnic warfare there began no sooner than General Aung San had persuaded the smaller nationalities to join the union.

The importance of Tibet and Burma also comes from their strategic location and rich natural resources. The Tibetan plateau makes up one-fourth of China’s landmass. Annexation has given Beijing access to that region’s immense mineral wealth and water resources. Tibet’s vast glaciers and high altitude have endowed it with the world’s greatest river systems. Most of Asia’s major rivers originate in the Tibetan plateau and their waters are a lifeline to 47 percent of the global population living in South and Southeast Asia and China.

The key difference between Tibet and Burma is that the repression in the former is by an occupying power. Months after the 1949 communist takeover in Beijing, China’s People’s Liberation Army entered what was effectively a sovereign nation in full control of its own affairs. Instead of granting the promised autonomy to Tibetans, Beijing has actually done the opposite: It has broken up Tibet as it existed before the annexation and sought to reduce Tibetans to a minority in the truncated Tibet through the state-supported relocation of millions of Han Chinese. It has gerrymandered Tibet by making Amdo (the present Dalai Lama’s birthplace) as the Qinghai province and merging eastern Kham into its provinces of Sichuan, Yunnan and Gansu.

The contrasting international responses to the repression in Burma and Tibet highlight an inconvenient truth: the principle that engagement is better than punitive action to help change state behavior is applied just to the powerful autocratic countries, while sanctions are a favored tool to try and tame the weak. While animpoverished Burma reels under tightening sanctions, a booming China openly mocks the Universal Declaration of Human Rights. The fact is that the more you punish the weak renegade states, the more the big autocracies tend to gain commercially and strategically. With its ability to provide political protection through its UN veto power, Beijing, in recent years, has signed tens of billions of dollars worth of energy and arms contracts with pariah regimes — from Burma and Iran to Sudan and Venezuela.

As resource-rich Burma remains mired in abject poverty under a brutal military regime that refuses to loosen its political grip despite widening international sanctions, it has become necessary to fashion a forward-looking international approach that allows outside actors, far from shutting themselves off from Burma, to seek to influence developments within. The present disjointed international approach (if it can be called an “approach”) underscores the need both for greater multilateral coordination on Burma and for engagement aimed at increasing external influence within Burma.

Today, under the cumulative weight of sanctions, Burma is coming full circle: Its 74-year-old junta head, the delusional Senior General Than Shwe, has amassed powers to run a virtual one-man dictatorship in Ne Win-style. Also, in the period since the free world began implementing boycotts, trade bans, aid cutoffs and other sanctions, it has seen its leverage over Burma erode. The situation thus calls for a more calibrated approach that entails refining the sanctions tool to achieve better-targeted sanctions and to create space to influence developments through engagement. Even as it has become fashionable to talk about better-targeted sanctions, the sanctions instrument, in reality, has become blunter against Burma.

Sanctions were intended to help the people of Burma, yet today it is the ordinary people that bear the brunt of the sanctions. The stepped-up punitive actions in the face of a deteriorating humanitarian situation are holding the Burmese people “economic hostage,” as Burmese author Ma Thanegi told Stanley A. Weiss in an interview.[35]

As far back as 2003, then U.S. Deputy Assistant Secretary of State Matthew Daley had warned in congressional testimony that many female garment workers made jobless by sanctions were being driven into prostitution. Yet, in its 2004 report to Congress, the State Department actually boasted that U.S. actions had shut down more than 100 garment factories in the previous year alone, with “an estimated loss of around 50,000 to 60,000 jobs.”[36] In the international effort to help build democracy in Burma — believe it or not — the big losers have been those on whose behalf the free world supposedly has been fighting.

While refining the sanctions approach to help spare the Burmese, international pressure must not be eased against the junta. But for international pressure, the junta would not have unveiled a timetable for a supposed transition to democracy. Earlier, it was due to mounting external pressure that it moved Suu Kyi from prison to house detention in September 2003 and then freed seven of the NLD’s most senior leaders. More recently, such pressure also explains why the junta facilitated UN special envoy Ibrahim Gambari’s three visits to Burma in six months, permitting him to meet with Suu Kyi, and also allowed Paulo Sérgio Pinheiro, a special rapporteur to the United Nations Human Rights Council, to come to Rangoon and investigate the September 2007 violence, including the number of casualties and detentions.

Yet, if there is to be progress on the “roadmap to democracy,” the military cannot be excluded from engagement. As visiting Singapore Senior Minister Goh Chok Tong said in Washington in April 9, 2008: “On Myanmar, I told the President (Bush) that while the army is the problem, the army has to be part of the solution. Without the army playing a part in solving problems in Myanmar, there will be no solution.”[37]

Building democracy in Burma is vital not only to end repression and to empower the masses, but also to facilitate ethnic conciliation and integration in a much divided society that has been at war with itself since its 1948 independence. There is, therefore, a need to build greater unity and coordination among the major democracies on a pragmatic Burma strategy. A good idea would to build a concert of democracies working together on Burma, serving as a bridge between the U.S., European and Asian positions and fashioning greater coordination in policy actions.

Without a structured and more progressive international approach, Burma will stay on the present deplorable path, with the military continuing to call the shots. As one analyst has put it, “economic sanctions on Myanmar may feel right, but they have helped produce the wrong results. Encouraging Western investment, trade and tourism may feel wrong, but maybe — just maybe — could produce better results. That might be politically incorrect, but at least it wouldn’t be politically futile.”[38] In an era of a supposed global village, why deny the citizens of Burma the right to enjoy the benefits of globalization and free trade? A more dysfunctional Burma is not in the interest of anyone.

The priority should be to carve out more international space in Burma, rather than shut whatever space that might be left there. International pressure without constructive engagement and civil-society development will not bring enduring results. To avert a humanitarian catastrophe in Burma, the same international standard applicable to autocratic, no-less-ruthless regimes in neighboring states must apply to Burma — engage, don’t isolate.

[*] The author is Professor of Strategic Studies at the privately funded Center for Policy Research in New Delhi.

[1] After the failed 1993-1996 National Convention to draft a new Constitution, the junta did nothing until international pressure intensified during 2003-04. It then issued invitations to a National Convention starting in May 2004 to take up the drafting of the Constitution where the earlier convention had left off. But the democratic opposition did not participate in that convention.

[2] President Bush’s statement of May 1, 2008, stated: “Today, I’ve issued a new executive order that instructs the Treasury Department to freeze the assets of Burmese state-owned companies that are major sources of funds that prop up the junta.”

[3] Ivo J. H. Bozon, Warren J. Campbell, and Mats Lindstrand, “Global Trends in Energy,” The McKinsey Quarterly, Number 1 (2007), p. 48.

[4] International Monetary Fund, 2006.

[5] See, for example, Alan Sipress, “Asia Keeps Burmese Industry Humming: Trade, Both Legal and Illegal, Blunts Effect of U.S. Economic Sanctions,” Washington Post, January 7, 2005, p. A11.

[6] Sean Turnell, “The Rape of Burma: Where Did the Wealth Go,” Japan Times, May 2, 2008.

[7] On January 12, 2007, China and Russia torpedoed a United Nations Security Council (UNSC) draft resolution tabled by the United States and Britain that called on the Burmese regime to halt military attacks against ethnic minorities, release Aung San Suu Kyi and other political prisoners, and promote a democratic transition.

[8] The actual holding in the two blocks is: Daewoo International (60 percent), ONGC Videsh (20 percent), GAIL (10 percent) and Korea Gas Corporation (10 percent). This Indo-Korean consortium is currently engaged in a new exploration drilling program in Block A3.

[9] Yolanda Fong-Sam, “The Mineral Industry of Burma,” in 2005 Minerals Yearbook (Washington, DC: U.S. Geological Survey, 2006).

[10] International Energy, at: http://en.in-en.com/

[11] John W. Garver, “Development of China’s Overland Transportation Links with Central, South-West and South Asia,” China Quarterly, No. 185 (March 2006), pages 1-22.

[12] Mohan Malik, “China’s Peaceful Ruse: Beijing Tightens Its Noose Round India’s Neck,” Force, December 10, 2005.

[13] Martin Smith, Burma: Insurgency and the Politics of Ethnicity (London: Zed Books, 1999).

[14] Suu Kyi accompanied her mother, Ma Khin Kyi, to India in 1960 when she was appointed Burma’s ambassador there. Suu Kyi studied at a high school in New Delhi and then at the undergraduate Lady Shri Ram College, also in New Delhi. Then, in the mid-1980s, Suu Kyi and her British husband, Michael Aris, were fellows at the Indian Institute of Advanced Studies at Simla.

[15] In September 1988, following Ne Win’s resignation, the military’s State Law and Order Restoration Council (SLORC) formally took power. SLORC was officially rechristened the State Peace and Development Council (SPDC) in November 1997.

[16] The 2003 Burma Freedom and Democracy Act prohibits the importation into the United States of any article that is a product of Burma until the president determines and certifies to Congress that Burma has taken certain democratic and counternarcotics actions. The Act directs the secretary of the treasury to direct any U.S. financial institution holding funds of the Burmese regime or the assets of individuals who hold senior positions in the regime to freeze them. It also requires that the executive seek to persuade international financial institutions to oppose any extension of a loan or financial or technical assistance to Burma until the requirements of the Act have been met. Burma’s neighbors are to be persuaded to “restrict financial resources” to Burma and Burmese companies. And, finally, the Act authorizes the president to assist Burmese democracy activists.

[17] The May 20, 1997, executive order issued by President Bill Clinton banned most new U.S. investment in the “economic development of resources in Burma.” Steven Erlanger, “Clinton Approves New U.S. Sanctions against Burmese,” New York Times, April 22, 1997.

[18] United States Information Service (USIS) Washington File, “USITC Report on Unilateral U.S. Trade Sanctions,” September 11, 1998.

[19] See, for example, Leon T. Hadar, U.S. Sanctions Against Burma: A Failure on All Fronts, Trade Policy Analysis Paper No. 1 (Washington, DC: Cato Institute, 1998). It argued: “U.S. policy toward Burma is an irresponsible moral posturing. Supporters of sanctions want to feel good that they are doing something to improve political and economic conditions in Burma by forcing someone else–American businesses, the ASEAN nations, and the Burmese people–to bear the costs. The result will be reduced access of the Burmese people to American products, people, and ideas; worsening economic conditions; and potential political and regional instability. It is indeed ironic that some members of America’s cosmopolitan knowledge class, who are the main beneficiaries of the process of economic globalization, are supporting policies that run contrary to free trade and open markets and deny the Burmese people the ability to enjoy the fruits of the global economy.”

[20] To be sure, the 2003 Burma Freedom and Democracy Act flowed from years of mounting congressional pressure on the executive branch to take a tougher approach toward that country. After the junta refused to honor the results of the 1990 polls, the U.S. Congress passed the Customs and Trade Act enabling the president to impose sanctions on Burma — an authority then-President George H.W. Bush declined to exercise. In 1993, the U.S. Senate, seeking to force the release of Aung San Suu Kyi, passed a nonbinding resolution calling on the president to work for a UN embargo against Burma. In 1995, Sen. Mitch McConnell introduced the Free Burma Act. Another similar legislation, with a name akin to the subsequent 2003 law, the Burma Freedom and Democracy Act, was introduced in 1996 by Rep. Dana Rohrabacher.

[21] Department of State, Report on U.S. Trade Sanctions Against Burma, Congressionally mandated report submitted to Congress on April 28, 2004.

[22] Suu Kyi was in Rangoon to take care of her stroke-stricken mother when Burma was battered by the cataclysmic events of August 1998.By August 26, 1998, she had plunged herself into politics, addressing her first public meeting outside the Shwedagon Pagoda that called for a democratically elected government. And less than a month later, she formed her National League for Democracy (NLD) party on September 24, 1998.

[23]The Failed States Index 2006 of The Fund for Peace is available at:

http://www.foreignpolicy.com/story/cms.php?story_id=3865

It is also available at:

www.ForeignPolicy.com

[24] Susan E. Rice and Stewart Patrick, Index of State Weakness in the Developing World (Washington, DC: Brookings Institution, 2008).

[25]World Press Freedom Index by Reporters Without Borders at:

http://www.rsf.org/rubrique.php3?id_rubrique=554

[26]Transparency International, Corruption Perceptions Index 2007, available at:

http://ww1.transparency.org/

[27] Freedom House, Freedom in the World (Washington, DC: Freedom House, 2006).

[28] World Press Freedom Index by Reporters Without Borders at:

http://www.rsf.org/rubrique.php3?id_rubrique=554

[29] Even the 1988 protests were triggered by an economic decision of the government — the 1987 action devaluing the currency that wiped out many people’s savings. Like in 2007, the 1988 demonstrations began among students before gradually spreading to monks and the public, culminating in the national uprising on August 8, 1988, when hundreds of thousands of people marched to demand a change of government. At least 3,000 people were believed killed when troops opened fire on protesters on that day.

[30] In Jimmy Carter’s words, “A counterproductive Washington policy in recent years has been to boycott and punish political factions or governments that refuse to accept United States mandates.” Jimmy Carter, “Pariah Diplomacy,” New York Times, April 28, 2008.

[31] Hadar, U.S. Sanctions Against Burma.

[32] After his investigations in Burma into the September 2007 violence, Paulo Sérgio Pinheiro, a special rapporteur to the United Nations Human Rights Council, released a report in Geneva which said that at least 31 people were killed in the protests in Rangoon — twice the death toll the regime had reported — and that 500 to 1,000 people were still being detained for involvement in the protests. The report also said that 74 people were listed as missing in the aftermath of the clashes. In addition, it reported that 1,150 political prisoners held before the September 2007 protests had not been released.

[33] The Tibetan government-in-exile said April 29, 2008, that at least 203 people, most of them Tibetans, had thus far died in the Chinese crackdowns in Tibet. But China’s official death toll — 22 — is almost 10 times lower.

[34] Michael Aris and Aung San Suu Kyi (eds.), Tibetan Studies in Honour of Hugh Richardson (New Delhi: Vikas, 1979).

[35] Interview published on website, New Mandala, at:

http://rspas.anu.edu.au/rmap/newmandala/

[36] Department of State, Report on U.S. Trade Sanctions Against Burma, Congressionally mandated report submitted to Congress on April 28, 2004.

[37] AFP, April 9, 2008.

[38] Stanley A. Weiss, “Burma: Are Sanctions the Answer?” International Herald Tribune, February 8, 2008

Assessing Regional Reactions to China’s Peaceful Development Doctrine 

Volume 18 Number 5
April 2008
Brahma Chellaney, Jae Ho Chung, Carlyle A. Thayer

China’s peaceful development doctrine is a broad strategy endorsed by the Chinese Communist Party (CCP), whose central goal is the transformation of China into a modern and sustainably developed country through rapid economic growth.The greatest challenge for this strategy is that Beijing must reassure regional neighbors that China’s increasing economic, military, and political power do not pose a threat.This issue of the NBR Analysis reveals unique insights by expert scholars into how India, South Korea, Indonesia, Thailand, and the Philippines perceive the potential risks and gains of China’s ambitious strategy.The assessment of such perspectives provides a valuable opportunity to gauge policy implications in a wide variety of areas, including politics, security, finance, and trade.Such analysis is key both to mitigating the risks of conflict in Asia and to ensuring that China’s rapid development is indeed associated with a peaceful regional environment.The National Bureau of Asian Research (NBR) solicited these papers in an effort to provide a foundation for future research on this issue and to better inform U.S.policy in the region by raising awareness of Indian, South Korean, Indonesian, Thai, and Philippine views.

Southeast Asian Reactions to China’s Peaceful Development Doctrine: Indonesia, the Philippines, and Thailand Carlyle A. Thayer

South Korea’s Reactions to China’s "Peaceful Development" Jae Ho Chung

Assessing India’s Reactions to China’s Peaceful Development Doctrine Brahma Chellaney

Assessing India’s Reactions to China’s “Peaceful Development” Doctrine

Brahma Chellaney

NBR Analysis, Volume 18, Number 5, April 2008

(c) The National Bureau of Asian Research, USA

China’s diplomatic “charm offensive” in Southeast Asia, Central Asia, the Persian Gulf region, and India’s immediate neighborhood has involved major political, economic, and strategic investments that have had the effect of bringing Indian interests under pressure. Such diplomatic penetration has, however, also made some of the courted countries wary of China’s strategic ambitions, leading these countries to search for countervailing influences. That change in turn has helped promote the acceptability of India as a player beyond South Asia. The China factor, for example, motivated the Association of Southeast Asian Nations (ASEAN) to make India a full dialogue partner. That same factor helped India to become a member of the East Asian Summit (EAS), which will design the proposed East Asian Community (EAC).

The Indian navy now conducts joint exercises with other states far beyond India’s shores, including in the South China Sea and in the Pacific. In April 2007 India, Japan, and the United States held their first trilateral naval maneuvers near Tokyo, and five months later the three teamed with Australia and Singapore for major war games on the Bay of Bengal. With U.S. encouragement, India provided naval escort in 2003 to commercial ships passing through the vulnerable, piracy-wracked Strait of Malacca. The undertaking, code-named Operation Sagittarius, was primarily designed to safeguard high-value U.S. cargo shipped from Japan passing through the Strait of Malacca on the way to Afghanistan. Through this operation the Indian navy not only demonstrated patrolling the Strait of Malacca to Southeast Asian states but also gained approval to operate in the ASEAN waters.

In several other respects, however, China’s charm offensive has either reared new strategic challenges for India or affected Indian economic or political interests. For one, China has been aggressively seizing energy-related opportunities overseas, at times to the detriment of India. For example Beijing persuaded Burma’s military junta in 2006 to sell to China gas from the partly Indian-owned A-1 and A-3 offshore blocks via a planned 2,380-kilometer pipeline to Yunnan.[1] Burma took India unawares by signing a memorandum of understanding (MOU) with China’s state-run PetroChina Company in early 2006 to supply gas to China from those same partly Indian-owned fields over a 30-year period.[2] To New Delhi’s acute embarrassment, the Burmese decision came just as India announced that New Delhi had reached an agreement with Beijing to jointly cooperate on securing oil resources overseas, a move designed to prevent Sino-Indian competition from continuing to drive up the price of energy assets. The loss of Burmese gas to China has created some bitterness in New Delhi, which has been eager to import gas from Burma via a pipeline through Bangladesh.[3]

Beijing also has aggressively sought oil and gas contracts in Iran, which is now the largest supplier of foreign oil to China, delivering 14% of China’s total oil imports. China has planned a 386-kilometer oil pipeline from Iran to link up with the Atasu-Alashankou pipeline between Kazakhstan and Xinjiang. China’s state-owned oil company, Sinopec (also known as China Petrochemical Corporation), signed a $100 billion deal in October 2004 to buy 10 million metric tons of liquefied natural gas (LNG) from Iran annually over a 25-year period. In exchange Sinopec secured a 51% stake in the giant Yadavaran oilfield in Iran’s south, leaving a minority 20% stake for a consortium of Indian companies led by the Oil and Natural Gas Company (ONGC) Videsh Limited (OVL).

China’s advantage over India is that, as a permanent member of the UN Security Council, Beijing wields considerable international clout and can provide political protection to renegade regimes. The fact that China can veto any UN sanctions proposal has not been lost either on Iran or on Burma. Beijing’s ability to provide political cover is a fundamental element of China’s thriving commercial ties with a host of problem states.

With the country’s new wealth, China also has been resourcefully building trade and transportation links to further larger Chinese interests in the countries around India.[4] Such links around India’s periphery are already bringing India under strategic pressure on separate flanks on both sides of the Indian peninsula:

1. China is fashioning a north-south trans-Karakoram strategic corridor stretching up to Pakistan’s new, Chinese-built Gwadar port, at the entrance to the Strait of Hormuz. Opened in the spring of 2007, the deepwater port at Gwadar represents China’s first strategic foothold in the Arabian Sea.

2. Another north-south strategic trail China is developing is the Irrawaddy corridor involving road, river, and rail links from Yunnan Province up to the Burmese ports on the Bay of Bengal.

3. China is also shoring up an east-west strategic corridor in Tibet across India’s northern frontiers, as illustrated by the $6.2 billion China-Tibet railway from Gormu to Lhasa that opened in July 2006. Beijing now plans to extend the Tibetan railway to the Nepalese capital of Katmandu and also to two other points: the tri-junction of the India-Bhutan-Tibet frontiers (in the Chumbi Valley) and the intersection of the India-Burma-Tibet borders.

4. China’s incremental efforts to build a “string of pearls” along the Indian Ocean rim symbolize Beijing’s desire for a fourth strategic corridor that would create a challenge to India from the south. China’s seeks to assemble this “string of pearls”—a term first used in a report for the Pentagon by U.S. defense contractor Booz Allen Hamilton—through forward listening posts, naval-access agreements and Chinese-built harbors stretching from Pakistan and Sri Lanka to Bangladesh and Burma. The Chinese interest in the Indian Ocean rim now extends to the Seychelles.[5]

The Irrawaddy corridor has brought Chinese security personnel to Burmese sites close both to India’s eastern strategic assets and to the Strait of Malacca. With the Irrawaddy corridor stretching to the Bay of Bengal, Chinese security agencies have positioned personnel at several Burmese coastal points, including the Chinese-built harbors at Kyaukpyu and Thilawa. These security agencies already operate electronic-intelligence and maritime-reconnaissance facilities on the two Coco Islands in the Bay of Bengal. India transferred the Coco Islands to Burma in the 1950s, and Burma then leased the islands to China in 1994. Today China operates a signals intelligence (SIGINT) collection facility from the Great Coco Island.

Beijing is reinforcing the strategic significance of the new port at Gwadar by linking it with the Karakoram Highway to western China through the Chinese-aided Gwadar-Dalbandin railway, which extends to Rawalpindi. In addition the Chinese-supported Makran Coastal Highway links Gwadar with Karachi, Pakistan’s main port. Gwadar, already home to a Chinese electronic listening post, is a critical link in the emerging chain of Chinese forward-operating facilities that stretch from the Arabian Sea to the Bay of Bengal and then to the Gulf of Siam.

Protected by cliffs from three sides and now being extended into a naval base with Chinese assistance, Gwadar will not only arm Pakistan with critical strategic depth against a 1971-style Indian attempt to bottle up Pakistan’s navy, but the port will also open the way to the arrival of Chinese submarines in India’s backyard. Beijing admits that Gwadar’s strategic significance is equivalent to the Karakoram Highway, which since opening in 1969 has helped underpin the Sino-Pakistan nexus and served as the route for covert Chinese nuclear and missile transfers to Islamabad. Linking the Karakoram Highway with Gwadar will likely to create a strategic-multiplier effect. Furthermore, the completion of the Gwadar project will enable the Chinese navy, with its access in Burma, to operate on both sides of the Indian peninsula.

Beijing is planning to build an energy pipeline from Gwadar to western China as a way to reduce the time and distance for transporting oil to China from the Gulf region. Beijing sees Gwadar as providing a more secure corridor for energy imports from the Gulf states. In the event of a strategic confrontation with the United States this safe corridor would prevent the interdiction of oil shipments to China’s resource-hungry economy. Gwadar, along with Burma’s Sittwe port (from where a separate energy pipeline to Yunnan is to be built), would help reduce China’s reliance on the Strait of Malacca, through which 80% of Chinese oil imports now pass. Given Beijing’s decision to substantially widen the Karakoram Highway and upgrade it to an all-weather passageway, China also has displayed likely plans to export and import goods through Gwadar.

In addition China is stepping up military and economic engagement with India’s other immediate neighbors—Bangladesh, Nepal, and Sri Lanka. Beijing’s broad-based military cooperation agreement with Dhaka—Bangladesh’s first military accord with any country—has four apparent objectives: to bring Bangladesh into the Chinese strategic orbit, to gain naval and commercial access to the strategically important port of Chittagong to connect Bangladesh with Burma, and to secure a doorway to India’s vulnerable northeast.

Far from moderating Indian fears, Beijing’s deepening ties with India’s neighboring states have made New Delhi increasingly concerned over Chinese activities. There is growing recognition in New Delhi that China’s rising power has become the single biggest cause of qualitative change in the geopolitical landscape. Despite New Delhi’s continuing emphasis on cooperation with Beijing, China is unlikely to shy away from investing more resources into activities and capabilities antithetical to Indian interests and security.

Sino-Indian Relations in the Next Five to Ten Years

India and China are old civilizations but new neighbors. The two countries became neighbors only in 1951 when the disappearance of the traditional buffer—Tibet—brought Chinese troops to what is now the 4,057 kilometer-long Sino-Indian frontier. As relatively new neighbors with no historical experience in dealing with each other politically, India and China face a steep learning curve while seeking to build equilibrium in their relations. Today both countries have a stake in maintaining the peaceful diplomatic environment on which the economic modernization and security of both depend. Yet the wounds of the 1962 Chinese invasion of India have been kept open by Beijing’s public and assertive claims to Indian territories. Nonetheless, compared to the troubled state of Sino-Indian relations three decades ago (before full diplomatic ties were restored following Mao Zedong’s death) relations today are more stable and marked by booming trade.

Looking ahead the China-India relationship is likely to remain complex and difficult, marked by cooperation in some areas but by competition, either latent or overt, in other areas. The underlying wariness or even suspicion that each has of the other’s intentions is unlikely to go away. Yet both countries will continue to feel the need to publicly play down the competitive dynamics of their relationship and emphasize cooperation.

It is in India’s interests to stress cooperation while at the same time working to reduce the power disparity with China by building greater stability and equilibrium in Asia through strategic ties with other democracies, including the United States and Japan. For China, a continued emphasis on cooperation would be consistent with Beijing’s larger “peaceful rise” strategy.[6] Indeed China’s choir book has been centered on one ingenious song—that the country’s emergence as a great power is unstoppable and that it is thus incumbent on other nations to adjust to China’s rise.

It is important to bear in mind, however, that the India-China strategic dissonance is rooted not only in their contrasting political ideals and quiet rivalry but also in Beijing’s relentless pursuit of a classical, Sun Tzu–style balance-of-power strategy. While presenting itself as a see-no-evil, do-no-evil state, Beijing is zealously working to build up China’s power capabilities to engage the world on Beijing’s own terms. In order to avert the rise of a peer rival in Asia, China has sought to strategically tie down India south of the Himalayas.

Over the next decade, India and China are likely to remain business partners rather than become friends. Neither side, however, would like to see their quiet competition slide into confrontation. Managed competition is thus likely to define the relationship between these two demographic titans in the coming years.

Trade

Bilateral trade between China and India—which jumped 15-fold from $2.3 billion in 2000 to $38 billion in 2007, with China enjoying a trade surplus of $10.7 billion last year—is likely to continue to expand, positioning China as India’s largest trading partner within the next couple of years.[7] There is, however, no Sino-Indian congruence on geopolitical issues. That is why the proclaimed “India-China strategic and cooperative partnership for peace and prosperity” remains devoid of any content other than a rapidly growing trade relationship.

Although the official Chinese media claims that the rapid development of Sino-Indian trade is due to “sound political relations,” political issues continue to be an obstacle even in trade.[8] New Delhi is not only wary of the idea of a free trade agreement (FTA) with Beijing but also continues to be concerned over Chinese dumping of goods and investments in strategic sectors in India. To Beijing’s loud protest, New Delhi has excluded from Indian contracts some Chinese firms that are tied to the People’s Liberation Army (PLA) or the Chinese Communist Party. For example India blacklisted the state-run China Harbour Engineering Company—which has developed the Gwadar deepwater port in Pakistan—from bidding for any Indian port contract.

Additionally the composition of Indian exports to China is not flattering to India. In the first half of 2007 iron ore comprised 52% of Indian exports to China. Overall, raw materials made up 85% of India’s total exports. India has been increasingly exporting low-cost raw materials while importing value-added Chinese goods—a pattern that is not sustainable. Indeed India must guard against becoming a raw-material appendage of the Chinese economy.

Political problems do not constrain interstate economic ties in today’s market-driven world. Even if Sino-Indian trade overtakes U.S.-Indian trade (which is a likely scenario) political issues will continue to divide Beijing and New Delhi. If growing trade was a barometer of political progress, Japan and China—with a trade volume almost ten times higher than that of India and China—would be allies. Similarly, Japan and South Korea, who engage in a much higher volume of trade than China and India, are finding it hard to manage their prickly bilateral political relationship, despite both being military allies of the United States. History testifies that when strategic animosities remain unaddressed, interdependent commercial ties do not guarantee moderation. Therefore, even as trade with China continues to grow, India’s strategic interests will increasingly lead New Delhi to search for ways to countervail Chinese power.

Territorial Disputes

India and China have continually disputed the border between the two countries since 1981. The two countries came to blows over the issue in 1962, the wounds from which still persist in negotiations over the border today. China’s assertive claims and overall stalemate in the negotiations have impeded the successful resolution of the border issue. As a result, China continues to occupy one-fifth of the original state of Jammu and Kashmir.

China’s recent claim over the entire Indian state of Arunachal Pradesh and aggressive patrolling of the border region signify that China is not interested in maintaining the status quo. As a result more than 300,000 Indian soldiers remain tied down in the region. Negotiations have been rich in symbolism but ultimately unproductive as the two parties have struggled to move past developing “principles,” “concepts,” and a “framework” for an overall settlement. Although the border issue ostensibly could be settled with a fairly straightforward compromise—e.g., India foregoing claims to territories lost to China and China abandoning claims to Indian-held areas—China does not seem interested in a settlement based on the status quo. China’s position, furthermore, is unlikely to change over the next decade.

Geopolitics of Oil and Water

In Asia energy is increasingly intertwined with geopolitics. As a result energy and security are inseparable today. With competition for the world’s oil and gas resources sharpening, Asia faces the specter of a 21^st-century version of an energy-related Great Game in which India and China are likely to be major players.

A cash-rich China has shown time and again that the country can nimbly outmaneuver India in bids for energy contracts in third countries. Nonetheless, some in India have imaginatively proposed cooperation with China on energy issues. The reality, however, is that China is a larger and more aggressive player willing to take major risks and has a track record of greater success; China therefore has little to gain from such cooperation with India. Thus in the coming years China and India are likely to continue to compete for energy resources to meet the needs of their rapidly growing economies.

The energy-related Sino-Indian rivalry, however, has obscured another emerging area of competition—water resources. Given Chinese control over the aqua-rich Tibetan Plateau (which is the source of most of Asia’s major rivers), China has a clear competitive edge. Tibet’s vast glaciers and high altitude have endowed the region with the world’s greatest river systems. These glaciers represent a crucial water source not only for China and India but also for numerous countries in Asia, including Bangladesh, Burma, Bhutan, Nepal, Cambodia, Laos, Pakistan, Thailand, and Vietnam.

The internal disputes that arise over water resources could potentially degenerate into interstate conflict. Many of the current water disputes are related to Chinese damming and redirection of Tibetan water. One such project, the gargantuan South-North Water Transfer Project, aims to redirect billions of gallons of water from the Yangtze River in the south to China’s parched Northern Plain where over-intensive farming, increasing urbanization and industrialization, desertification, and a generally drier climate have strained the region’s major river, the Yellow River, to the breaking point. The project’s stillborn western line aims to divert precious water resources from the Tibetan Plateau, thus threatening to diminish the water flows of other countries’ major river systems, including the Indus, Salween, Mekong, Brahmaputra, Karnali, and Sutlej systems. If such a large-scale rerouting were to begin, the action would constitute the declaration of a water war on lower-riparian India and Bangladesh.

Several Chinese projects in west-central Tibet have a bearing on river water flows into India, but Beijing is reluctant to share information. After flash floods occurred in India’s northern state of Himachal Pradesh, however, China agreed in 2005 to supply New Delhi with data on any abnormal rise or fall in the upstream water level of the Sutlej River, on which China has built a barrage. Discussions are ongoing to persuade Beijing to share flood control data during the monsoonal season for two Brahmaputra tributaries—the Lohit and Parlung Zangbo Rivers—as China has done since 2002 on the Brahmaputra River, which China has dammed upstream at several places. When Chinese president Hu Jintao visited India in November 2006, the two countries agreed to set up a joint expert-level mechanism on interstate river waters. Beijing now seems to be having second thoughts on setting up such a mechanism.[9]

India’s Relations with the United States and Japan

Beijing has not hidden its unease over the larger strategic implications of India’s improving relations with the United States and Japan. The direction of the newly launched Quadrilateral Initiative between Australia, India, Japan, and the United States, which is founded on the concept of democratic peace, is still undecided owing to differing perceptions within the group. This quartet, however, represents the likely geopolitical line-up in the Asia-Pacific in the years ahead.

China, India, and Japan represent a strategic triangle in Asia. If China is A, and India and Japan are B and C, the sum of B plus C would be greater than A. India and Japan appear to be natural allies, and China’s accumulation of power will drive the two countries closer together. The relationship between the United States and India is also rapidly changing. In the words of a senior U.S. official, “now that we’ve consummated the civil nuclear trade [agreement] between us [the United States and India], if we look down the road in the future, we’re going to see far greater defense cooperation between the United States and India: training; exercises; we hope, defense sales of American military technology to the Indian armed forces.”[10]

The newly emerging geopolitical equations are likely to reinforce Sino-Indian suspicions and complicate the development of the bilateral relationship between Beijing and New Delhi.

The Economic, Trade, and Security Implications of China’s Peaceful Rise for India

Given the size, ambitions, and proximity of India and China, both countries are naturally concerned by the expansion of each other’s capabilities. India’s greatest concern regarding China’s rapid accumulation of power is not that Beijing would carry out another 1962-style military invasion, but rather that China would employ the threat of such a military invasion to shift the overall regional balance of power in China’s favor. New Delhi wishes to forestall this strategic shift because of the likely adverse implications for India’s security and well-being.

Yet the rapid and wild rise of China is transforming the Asian geopolitical landscape like no other development. Not since Japan’s rise under the Meiji emperor has another non-Western power become as consequential to the future of the international order as China is today. The future of Asian security is likely to be heavily shaped by whether China continues to rise in a linear fashion under an autocratic leadership. For India the implications are stark. Just as India bore the brunt of the rise of international terrorism because of country’s proximity to the Pakistani-Afghan epicenter of global jihad, India will be directly affected by the growing power of an adjacent opaque empire. Therefore, India can ill afford to be complacent.

Despite China’s meteoric rise, conflict between China and India is not inevitable. A peaceful diplomatic environment is essential for the continued economic growth and security of both countries. Furthermore, India and China account for one-third of the world’s population. How their relationship evolves thus will have an important bearing on Asian geopolitics, international security, and globalization.[11]

It has become commonplace to compare the Indian and Chinese economies and project future growth on the basis of the present relative advantage of each country. The comparisons inexorably pit India’s services-driven growth and institutional stability, founded on pluralism, transparency, and the rule of law, against China’s resolute leadership, high savings rate, good infrastructure, and manufacturing strength. Overlooked, however, is that globalization threatens China’s autocracy, not India’s democracy.

Whether China follows a stable or violent path to political modernization will determine the country’s continued unity and strength.[12] In most respects, China knows what is required for becoming a great power. Though India’s emergent realism has yet to overcome traditions of moral posturing, Beijing epitomizes strategic clarity and pragmatism, zealously erecting the building blocks of comprehensive national power.

Although both China and India are ascendant powers, enjoying high GDP growth rates, the conditions for the rise of these countries are different and reflect the relative strengths and weaknesses of each country. That difference in turn underscores the power disparity between the two countries, and points to the economic, trade, and security implications of China’s peaceful rise for India.

India’s white-collar, services-led economic growth contrasts sharply with China’s blue-collar, manufacturing-driven expansion. More striking is that in India the private sector continues to fuel economic growth while China’s economic growth is largely state-driven. India performs poorly wherever the state is involved, while the strength of the Chinese state as the primary catalyst of accumulating power carries significant strategic ramifications.

Most startling is that although both states possess similar competitive advantages, such as a large pool of skilled manpower and low wages, an increasing export surge drives China’s economic growth while India’s import-dependent economy relies primarily on domestic consumption for growth. Indian imports currently exceed exports by as much as 60%. India’s dependency on imports also sets the country apart from the Asian “tiger” economies, which are all export-oriented.

The contrast between India and China is stark in terms of military capabilities as well. India’s weaponry remains subcontinental in range, whereas China’s weaponry is intercontinental. Even when China was poor and less developed, Beijing consciously emphasized building comprehensive national power. China developed its first intercontinental ballistic missile (ICBM), the 12,000-kilometre DF-5, in the 1970s. New Delhi, in contrast, has not yet started development of its first ICBM, even though ICBMs are potent symbols of power and coercion in international relations.

Beijing has sustained double-digit increases in military spending for two continuous decades; in terms of percentage of GDP China’s military spending has risen the fastest in the world. By contrast, in that same two-decade period India’s defense expenditure has declined appreciably as a percentage of the country’s GDP.

Even though the official Chinese military budget—a figure few believe—is double the official level of Indian defense spending, how defense funds are utilized, rather than size, is what makes the contrast between the two states interesting. China’s priority for decades has been twofold: boosting the country’s indigenous capabilities, especially with respect to conventional and nuclear deterrence, and working to shift the military balance in Asia in China’s favor. Today Beijing’s increasingly sophisticated missile force is at the heart of China’s military modernization. Even as Beijing imports high tech conventional weaponry from Russia, China has emerged as one of the biggest arms exporters in the world. Additionally, China’s three biggest arms clients are India’s immediate and troubled neighbors—Pakistan, Burma, and Bangladesh, in that order.

India, in contrast, relies on arms imports for meeting basic defense needs. New Delhi’s addiction to weapon imports ensures that the country’s domestic armament-production base remains weak and underdeveloped. Furthermore, though China apportions 28% of the country’s military budget for defense-related research and development, India apportions just 6% for research and development.

Given China’s deep-rooted authoritarianism, vibrant state-driven economy, growing military might, and unconcealed aim to dominate Asia, India must narrow the power disparity with Beijing through a commitment to the development of economic and military power. That need is further underscored by the likely arrival of Chinese submarines in India’s strategic backyard, the Indian Ocean, which is vital to world trade and the supply of oil. Close to half of the world’s overseas commerce, and one-fifth of global oil and gas supplies, pass through the Indian Ocean rim. The region is also critical for energy-poor India, who imports 75% of the country’s oil and gas supplies by sea. The security of sea lanes in the Indian Ocean rim is thus vital to India’s economic and security interests.

As the growing asymmetry in power with China puts New Delhi at a disadvantage when dealing bilaterally with Beijing, broader security arrangements or initiatives will become increasingly attractive to India. Such arrangements or initiatives can help build the security of vital sea lanes and contribute to wider power equilibrium in Asia.

New Delhi’s ability to avert the emergence of a Beijing-oriented Asia will hinge on India’s success in retaining the country’s major role in the Indian Ocean. A China that expands its presence in the Indian Ocean and exerts increasing influence over the regional waterways—as well as over Burma, Bangladesh, Sri Lanka, Pakistan, and Nepal—will pave the way for a Sino-centric Asia and for a greater strategic squeeze of India.[13]

Events in the Indian Ocean rim as much as in East Asia, therefore, will determine the balance of power in Asia.[14] For India to keep the Chinese navy out of India’s backyard, New Delhi must exert naval power at critical chokepoints. If India does not guard the various gates to the Indian Ocean—for instance, through strategic partnerships with key littoral states—the country will have to confront the Chinese navy in the Bay of Bengal and the Arabian Sea before long. Not surprisingly, India is now seeking to build defense ties, conduct joint military exercises, cooperate on energy, and hold strategic dialogues with countries in the Indian Ocean rim and beyond. For India the maritime arc stretching from the Persian Gulf through the Strait of Malacca to the South China Sea and the Sea of Japan constitutes the “new silk route.” Building maritime security in this arc demands cooperation and strategic partnerships among countries sharing common interests and values.

[1] Two Indian energy firms, ONGC Videsh Limited (OVL) and Gas Authority of India Limited (GAIL), own a combined 30% stake in the adjacent Burmese gas fields A-1 and A-3.

[2] The memorandum of understanding (MOU) was followed by a $84 million soft loan from Beijing and a technical survey by PetroChina for laying the pipeline from the Burmese gas site at Kyaukphyu to Ruili in Yunnan Province. See Sanjay Dutta, “Gas Pipeline: Myanmar Takes India for a Ride,” Times of India, March 27, 2006.

[3] Amitar Ranjan, “Myanmar Gas Bid Lost, MEA and Petroleum in War of Words,” Indian Express, July 30, 2007.

[4] John W. Garver, “Development of China’s Overland Transportation Links with Central, South-west and South Asia,” China Quarterly, no. 185 (March 2006): 1-22.

[5] Brahma Chellaney “China Covets a Pearl Necklace: Dragon’s Foothold in Gwadar,” Asian Age, April 7, 2007, http://chellaney.spaces.live.com/Blog/cns!4913C7C8A2EA4A30!249.entry.

[6] The theory of China’s “peaceful rise” originated in a book published in April 1998 by Chinese strategic scholar Yan Xuetong and three of his colleagues. The book discusses China’s strategy to emerge as a great power without facing Cold War–style containment. The theory was quickly embraced by the communist leadership. Yan Xuetong (ed.), Zhongguo Jueqi: Guoji Huanjin Pinggu [For China to Rise: Assessing the International Environment], (Tianjin, China: Tianjin People’s Publishing House, 1998).

[7] The trade pattern, however, disturbingly shows India as a raw-material appendage to China’s rising industrial might. At the end of fiscal 2006-07, more than 50 percent of Indian exports to China comprised just one item—iron ore. When other primary commodities were added, that figure totaled 85 percent of the exports. In return, India has been importing more and more Chinese processed goods, to the extent that it has become import-dependent on China for steel tubes and pipes.

[8] “China-India Trade to Gear Up,” People’s Daily Online, August 2, 2005.

[9] Brahma Chellaney, “Averting Water Wars in Asia,” International Herald Tribune, June 26, 2007.

[10] R. Nicholas Burns, “On-The-Record Briefing on the Status of the U.S.-India Civil Nuclear Cooperation Initiative and the Text of the Bilateral Agreement for Peaceful Nuclear Cooperation (123 Agreement),” (U.S. Department of State press briefing, July 27, 2007, http://www.state.gov/p/us/rm/2007/89559.htm.

[11] Brahma Chellaney, Asian Juggernaut: The Rise of China, India and Japan (New Delhi: HarperCollins India, 2006).

[12] Joydeep Mukherji, “China, India, and the Fate of Globalization,” Standard & Poor’s, January 3, 2005, http://www2.standardandpoors.com/portal/site/sp/en/ap/page.article/2,1,1,2,1104429838302.html.

[13] Mohan Malik, “China’s Peaceful Ruse: Beijing Tightens Its Noose Round India’s Neck,” Force, December 10, 2005.

[14] Donald L. Berlin, “India in the Indian Ocean,” Naval War College Review 59, no. 2 (Spring 2006): 58–89.

Brahma Chellaney is Professor of Strategic Studies at the Centre for Policy Research in New Delhi. He can be reached at chellaney@gmail.com .